Before he has even reached the check-out, a tiny chip -- called a radio frequency identification, or RFID -- encased in the price tag on the item, has signaled the store's wireless network. Its message: update the inventory now -- a new shirt is needed.

There is more to the little device, also called a nano-tag, however. As soon as the buyer starts the checkout process, the networked device can provide suggestions for a matching tie or even cuff links -- both always in stock due to real-time inventory management. With a preferred customer card, containing an embedded RFID chip, the clerk is signaled that the patron should be given a discount on his purchases.

"RFID is going to be huge," said Charlie Humphreyson, a partner in H02 Partners in Dallas, a venture capital firm.

"It's going to be as big as the PC. There is a 128-bit memory capability in nano-tags now. Twenty years from now, they may have the power that PCs do today," he told United Press International.

RFID technology has been around for decades, but is now gaining momentum as wireless-fidelity, or WiFi, networking, and other wireless standards have emerged in the marketplace.

Stores in the past used primitive, bulky RFID devices to prevent shoplifters from leaving the premises without paying.

The memory of the chips, which passively emit radio signals to a wireless network, has grown dramatically, enabling retailers to start thinking about how to use the chips for inventory management and the like.

"The technology promises a huge reduction in labor costs and other savings," said Donnaca Schollard, a director of EDS Inc. in London.

Schollard said U.S. retailers such as Wal-Mart, and others in Europe, such as Marks & Spencer, Tesco and Metro, have conducted experiments with the RFID technology.

"Benneton is looking at it too," Schollard told UPI.

Packaged goods manufacturers around the globe, such as Gillette and Unilever and Proctor & Gamble, also are keen on the technology.

"They're creating 'smart shelves' that can tell the retailer when they need to be replenished," Schollard said. "Areas like apparel will be some of the earlier movers, because of the cost-value equation. They have a complex and fragmented inventory -- of different styles and sizes."

Humphreyson said he sees a parallel between the growth of RFID and the emergence of PCs. Computers really began to emerge during World War II, he explained, and then companies such as IBM Corp. and Digital Equipment Corp. moved the industry along during the 1960s. But by the 1970s, the cost of computer chips from Intel Corp. had dropped so much the idea of PCs became a reality.

Humphreyson said very early RFID technology also was used during World War II, some 60 years ago, to track military hardware.

Now, technologies, including wireless networks and inexpensive RFID devices, have accelerated the development of the field.

"Instead of the desktop being the edge of the network, the new edge is wherever the chips are placed," said Humphreyson, who added he is investing in several companies he thinks will have a major impact on the marketplace within the next two or three years.

One of his investments is in a company called Globeranger.com, created by one of the founders of Nortel Networks. The company aims to "enable smart networks" of connected items, "whether they be cameras, phones, PCs or RFID chips," Humphreyson said.

Another project he is pursuing is called Innerwireless.com, a firm that is developing an antenna that can handle multiple networks and frequencies of wireless communications.

"Somebody's got to make all of this work," Humphreyson said.

Though product tracking appears to be the biggest application of RFID technologies, there are other intriguing possibilities on the horizon. The technologies are more revolutionary than evolutionary, experts said.

"There are potentially disruptive characteristics to this technology," said Bret Kinsella, director at Sapient Corp. in Cambridge, Mass., a technology consultancy. "It may do for operational processes what the Internet did for communications."

For example, he said, a family visiting an amusement park can be outfitted with "RFID bracelets" that would enable them to visit rides and concession stands without having to pay cash or provide tickets at each stop.

"You can also go to a kiosk and track where your kids are in the park, if they get separated from you," Kinsella told UPI. "You may find out that they are on a particular ride, and determine that it will be done in 15 minutes, and simply go and meet them there at the exit point."

Also, Prada, the fashion retailer, is using RFID-enhanced preferred customer cards at a store in Manhattan to alert store clerks that a big-spending customer is in the store and should be given special treatment, Kinsella said.

To be sure, there are privacy and security concerns about RFID technologies, ones that have raised scrutiny from civil liberties advocates. These groups fear an Orwellian invasion of privacy from retailers who know everything about customer buying patterns.

"People get a little bit concerned about privacy issues -- is this for identifying me as a person, or the product I am trying to buy?" asked Ken Evans, vice president of product management at Fortress Technologies in Tampa, Fla. "But we think if you make sure that there are no weak links in the WiFi network, it will be secure."

--

Gene J. Koprowski covers telecommunications technology for UPI Science News. E-mail [email protected]

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